Cryptocurrency News

Two Individuals Arrested for the Extortion of Startup Crypto Company

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On September 18, 2019, the authorities of the United States and FBI (Federal Bureau of Investigation) have arrested Steven Nerayoff and Michael Hlady who threatened to destroy the startup cryptocurrency company for millions of dollars.

The Seattle-based victim company is a startup business that deals in generating user traffic to the products of the client by issuing their crypto tokens as loyalty rewards. In November 2017, the company was planning to raise the capital by Initial Coin Offering (ICO) and Steven, as a lawyer was appointed to complete a successful ICO  in return of raising 22.5% funds and 22.5% of cryptocurrency tokens. Michael was appointed for the department of operations.

After some time, both suspects started showing the signs of extortion. They ask for millions of dollars in company tokens. Both defendants threatened the executive of the company with the sabotage of ICO and destroyed the company. He asked for the increased compensation i.e. 17,000 to 30,000 ETH which was paid by the company without any additional services.

Richard P. Donoghue of the US Attorney said that both men, Steven and Michael came with an old-fashion shakedown to the 21st-century cryptocurrency company. This office and our FBI partners are protecting their businesses from extortion, even if the demands are for the US dollars or cryptocurrency.

William Sweeney, the Assistant Director-in-charge of FBI, said that it is an old-fashioned and classic scheme of extortion. It is a risky business to impose the demands forcefully for personal gain, whether one is asking to pay off cash or cryptocurrency. The FBI will seek justice for the people as well as businesses who have suffered from such scams.

In August, it was reported by Symantec that in a year, cyber criminals earn up to $1.2 million in Bitcoin (BTC) through bomb threat and sextortion scams.

In May 2019, it was reported that there were 63 wallets associated with scams got a 12.8 BTC in total worth of $106,240 at that time. According to the estimation of Symantec, if they consider the example of May, then the estimated yearly income is $1.2 million.

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